Some exempted from minimum wage, increased or not

Published: Wednesday, April 16, 2014 3:32 p.m. CDT

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(AP Photo/J. Scott Applewhite, File)

FILE - This April 2, 2014 file photo shows Senate Health, Education, Labor and Pensions Committee Chairman Sen. Tom Harkin, D-Iowa, right, accompanied by Senate Majority Leader Harry Reid of Nev., left, and others, urging approval for raising the minimum wage, during a news conference on Capitol Hill in Washington. When the Senate debates a Democratic proposal to raise the federal minimum wage, some workers wonít benefit even if lightning strikes and the long-shot effort prevails. More than a dozen categories of workers are exempt from the current $7.25-an-hour minimum, running from casual babysitters to some workers with disabilities to crews on fishing ships. The bill by Harkin, would gradually raise the minimum to $10.10 by 2016 but doesnít close any loopholes, which also include live-in companions for the elderly, staffs of state and local elected officials and jobs at summer camps and seasonal amusement parks.

More than a dozen categories of jobs are exempt from the minimum, currently $7.25 an hour. Those exclusions, rooted in labor law history, run from some workers with disabilities to crews on fishing ships to casual baby sitters.

Legislation sponsored by Sen. Tom Harkin, D-Iowa, would gradually raise the minimum to $10.10 by 2016. The Congressional Budget Office estimates it would mean higher earnings for 16.5 million workers — but also would cost 500,000 others their jobs.

Harkin's measure wouldn't eliminate exemptions, including for live-in companions for the elderly, staffs of state and local elected officials and jobs at summer camps and seasonal amusement parks.

The federal Bureau of Labor Statistics says nearly 1.8 million hourly workers were paid below $7.25 last year — about 2 percent of the 76 million Americans earning hourly wages. An additional 1.5 million earned exactly $7.25.

Some earning under that amount are covered by lower requirements. In one major category, wages for tipped employees such as waiters can be as low as $2.13 hourly, as long as their pay reaches the overall federal minimum when tips are included.

Harkin's measure would gradually raise the minimum for tipped workers to 70 percent of the minimum for most workers.

Asked why he wasn't eliminating more exemptions, Harkin said, "I'm having a hard enough time getting votes for the minimum wage" by itself.

According to the statistics bureau, most people earning under $7.25 — nearly 1.1 million — work in food services and drinking establishments.

The bureau and the Labor Department's Wage and Hour Division said they had no figures on how many workers were illegally paid less than $7.25.

Though Democrats say higher-paid workers would help the economy by spending more, Republicans point to projections that an increase in the minimum wage could cost some workers their jobs. That negative prediction is based on the idea that higher wages would bring higher prices and therefore hurt the economy and employment — and also on an assumption that a minimum wage increase would lead some businesses to trim the number of low-paid workers.

Harkin, whose bill is slated for Senate debate this month, said there has been "no push" from most exempted groups for minimum wage coverage. Of the excluded groups, the loudest objections have probably come from those representing the disabled.

Employers receiving government certification can employ disabled people at below the minimum wage, paying whatever they determine reflects a worker's productivity.

Most of these employees are mentally impaired and work in special workshops run by organizations like Goodwill and Easter Seals.

The Labor Department's Wage and Hour Division says 229,000 workers were certified for such wages last year. Groups representing disabled people say the figure is over 400,000. Either way, they are a small portion of the roughly 15 million disabled working-age Americans.

Advocates for the disabled say the system, originally meant to encourage employers to hire such workers, is being abused by some organizations that underpay and inadequately train them.

"This is a system that lives on the perception that these people cannot be productive," said Anil Lewis, a top official with the National Federation of the Blind, which wants to repeal the special wages.

But ending that program would mean many disabled workers "would not have the dignity, purpose and pride of a paycheck," said Terry Farmer, CEO of ACCSES, the trade group representing Goodwill and other groups employing disabled people.

A long-time advocate for the disabled, Harkin said he is trying separate legislation to require employers who pay disabled workers below the minimum wage to provide better training for higher-salaried jobs.

The federal minimum wage was created by the Fair Labor Standards Act in 1938. That New Deal measure also limited the work week — to 44 hours initially — and curbed child labor.

When President Franklin Roosevelt signed the bill into law, the minimum was set at 25 cents an hour, mainly covering industrial jobs. To win crucial votes from Southern Democrats in Congress, Roosevelt agreed to exclude occupations like farm laborers and domestic workers, who were largely black.

Also exempted were some other low-paying jobs that employed many women, including retail and many clerical workers. Many at-home jobs were also excluded. People who make evergreen wreaths at home are exempted to this day.

"The farther from the factory model of employment and the closer to some family thing, the likelier you were to get some kind of exception" to coverage, said Nelson Lichtenstein, a professor at the University of California at Santa Barbara who has studied labor history.

Gradually, Congress has broadened the law's coverage, adding public school, construction industry and many retail and farm workers in the 1960s. Government and domestic workers were included in the 1970s. Overall, the minimum wage has expanded from initially covering about a third of workers to what the Congressional Budget Office says is now two-thirds.

Under Harkin's bill, lower minimum wages for some workers would grow because they are linked to the full minimum wage. That includes many fulltime students, who must get at least 85 percent of the full minimum.

Unchanged would be the $4.25 hourly minimum for teenagers' first 90 days of work.

Others still exempted from minimum wage coverage would include workers at some small-circulation newspapers and small farms, and people who deliver newspapers. And some businesses with annual sales below $500,000 are exempt.

Administrative, professional and executive employees also are excluded, though most earn more than the minimum wage. President Barack Obama has ordered the Labor Department to write new rules qualifying more salaried management workers for minimum wage and overtime coverage.

William Samuel, the AFL-CIO's government affairs director, said the labor organization urged Harkin to raise the tipped workers' minimum in his bill. He said his group hasn't sought minimum wage coverage for other excluded occupations in "some unique and fairly small industries we haven't focused on."